These 10 portfolio names outperformed the stock market amid the October decline

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 26, 2023. 

Brendan Mcdermid | Reuters

Despite a downbeat month for stocks and mounting macroeconomic uncertainty, several Club names outperformed the market in October — and landed in the green.  

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Top Wall Street analysts pick these 5 stocks for compelling returns, including Nvidia

The logo of Nvidia at its corporate headquarters in Santa Clara, California, May 2022.

Nvidia | via Reuters

The macro backdrop is looking challenging as September begins, but analysts have highlighted several stocks that they feel confident about for the long term.

Here are five attractive stocks, according to Wall Street’s top experts, as rated by TipRanks, a platform that ranks analysts based on their past performance.

Nvidia

Let’s start with shares of chip giant Nvidia (NVDA), which are experiencing a phenomenal rise this year as a frenzy around generative artificial intelligence boosts demand for the company’s graphics processing units or GPUs. The company recently reported its fiscal second-quarter results, which crushed Wall Street’s expectations, as revenue more than doubled compared to the prior-year quarter.

JPMorgan analyst Harlan Sur noted that expectations were high, heading into the fiscal second-quarter print. Still, Nvidia delivered results and guidance that were way above estimates, thanks to the significant demand pull for the company’s data center products.

The analyst expects the company’s earnings power to grow by over 30% annually over the next few years, driven by continued strength in the data center segment, an incremental auto revenue pipeline of nearly $14 billion, and an incremental $1 billion to $2 billion from software, licensing and subscription revenues over the next 3 to 4 years.

Sur raised his price target to $600 from $500 and reaffirmed a buy rating on NVDA stock, saying, “The build out of generative AI and large language/transformer models are continuing to drive expanding demand for NVIDIA’s accelerated compute/networking platforms and software solutions.”

Sur ranks No. 95 among more than 8,500 analysts on TipRanks. His ratings have been successful 65% of the time, with each rating delivering an average return of 19.3%. (See Nvidia Hedge fund Trading Activity on TipRanks).

Marvell Technology

Another semiconductor stock in this week’s list is Marvell Technology (MRVL). The company managed to surpass analysts’ expectations for the fiscal second quarter, even as revenue declined compared to the year-ago period. Management expects sequential revenue growth to accelerate in the fiscal third quarter, fueled by AI and cloud infrastructure.

In reaction to the results, Deutsche Bank analyst Ross Seymore reiterated a buy rating on MRVL stock with a price target of $70. The analyst noted that the company delivered a modest top-line beat and in-line outlook, with solid acceleration in AI-related applications offsetting macro-related weakness.

“Overall, we continue to believe MRVL has a compelling portfolio of infrastructure products that address powerful secular growth trends in AI/Cloud (electo-optics & significant custom compute), 5G and Automotive,” said Seymore.

The analyst thinks that Marvell’s infrastructure products, coupled with an eventual cyclical recovery in the storage, wired and on-premise businesses, would help in significantly accelerating the company’s growth heading into calendar year 2024.

Seymore holds the 9th position among more than 8,500 analysts tracked on TipRanks. His ratings have been profitable 75% of the time, with each rating delivering an average return of 24.2%. (See Marvell Stock Chart on TipRanks)

Palo Alto Networks

Next up is cybersecurity provider Palo Alto Networks (PANW), which reported better-than-anticipated fiscal fourth-quarter earnings. Revenue grew 26% year-over-year to $1.95 billion but slightly lagged estimates.

BMO Capital Markets analyst Keith Bachman, who ranks 584th out of over 8,500 analysts on TipRanks, noted that the company’s fiscal 2024 guidance of 19% to 20% year-over-year billings growth and an 37% to 38% adjusted free cash flow (FCF) margin was better than expectations of mid-teens billings growth and a FCF margin in the mid-30% range.

Bachman thinks that the trend of consolidating solutions with leading security vendors will continue as the threat landscape evolves and as generative AI emphasizes the need for data aggregation. He added that implementing a consolidated portfolio enhances the prospects for real-time threat detection and remediation.

The analyst highlighted that customers are increasingly adopting each of PANW’s three platforms (Strata, Prisma and Cortex), as they look for integrated solutions and unified data models. He increased his price target to $275 from $235 and reiterated a buy rating on Palo Alto.

“We believe that the strength of PANW’s portfolio and the consolidation of spend are key drivers of PANW’s long-term targets and net new NGS ARR [next-generation security annual recurring revenue] growth,” said Bachman.

The analyst has a success rate of 57% and each of his ratings has returned 7%, on average. (See Palo Alto Financial Statements on TipRanks).

Intuit

Financial software company Intuit‘s (INTU) fiscal fourth-quarter results topped analysts’ forecast. That said, the company’s earnings outlook for the first quarter of fiscal 2024 missed expectations while revenue guidance was in line with estimates.

Deutsche Bank analyst Brad Zelnick explained that the company’s strong fiscal fourth-quarter results were driven by the outperformance of its small business unit, supported by solid growth in the QuickBooks Online (QBO) ecosystem.

At the innovation and investor day events scheduled to be held in September, the analyst expects management to reveal more details about Intuit’s AI investments over the past several years and advances in generative AI. He expects the company’s AI initiatives to create value for small business owners, consumers, and taxpayers, driving long-term growth and improved profitability.

Zelnick maintained his buy rating on INTU and increased the price target to $575 from $525, saying, “We see its AI-driven expert platform powering accelerated innovation with leverage, thus enabling sustained mid-teens or better EPS growth.”

Zelnick holds the 50th position among more than 8,500 analysts on TipRanks. His ratings have been profitable 71% of the time, delivering an average return of 15.4%. (See Intuit Insider Trading Activity on TipRanks) 

The Chefs’ Warehouse

We end this week’s list with The Chefs’ Warehouse (CHEF), a distributor of specialty foods, supplies and ingredients for chefs and restaurants.

BTIG analyst Peter Saleh pointed out that CHEF stock is trading at or near trough EV/EBITDA and P/E multiples (excluding Covid-era volatility) despite six guidance upgrades over the past 18 months, record sales, gross profit, operating income and EBITDA.

The analyst expects the company’s sales to grow 28.5% to $3.36 billion in 2023, backed by about an 8% rise in organic sales, with acquisitions contributing the remaining growth. He argued that while his estimate is more than twice the 2019 revenue of $1.59 billion, shares are trading about 25% below pre-pandemic levels. Overall, Saleh believes that CHEF shares are massively undervalued and underappreciated by investors.

Retaining a buy rating with a price target of $48, Saleh said, “Given the growth profile, including double-digit sales and EBITDA growth, we believe CHEF represents a unique opportunity for long-term investors, and we maintain the stock as our small/mid-cap Top Pick.”

Saleh ranks No. 402 out of more than 8,500 analysts tracked on TipRanks. Additionally, 60% of his ratings have been profitable with an average return of 11.1%. (See CHEF’s Technical Analysis on TipRanks)

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Here are our top 4 stocks and worst 4 stocks to start the second half of 2023

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 12, 2023. 

Brendan McDermid | Reuters

Two weeks into the second half of the year, we put together a quick look at the top four performers and the bottom four in Jim Cramer’s Charitable Trust, the stock portfolio we use for the Investing Club.

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